ZEITGUIDE “BUSINESS AND FINANCE” IMAGE BY KRISTOFER PORTER

The green rush is on.

Call them ganjapreneurs or pot pioneers, but lots of high-minded people are getting into the canna-biz.

Laugh all you want, while many are laughing to the bank.

The ArcView Group, a canna-business investment network, estimates that America’s legal marijuana market will be $2.5 billion this year, and could pass $10 billion in 2018.

Right now, 22 states and Washington, D.C. have decriminalized or legalized medical marijuana. Florida, Ohio, New York, and Pennsylvania are also in process. The White House has, in essence, given the green light to the recreational pot business in Colorado and Washington.

The culture has indeed changed since Bill Clinton claimed he never inhaled. According to a recent Pew Research Center survey, 75% of Americans believe selling and using marijuana eventually will be legal. “I think it’s game over in less than five years,” Oregon congressman Earl Blumenauer told The Huffington Post.

Colorado looks like a great case study so far. The state has brought in $27 million from pot-related taxes, licenses, and fees this fiscal year, according to state Department of Revenue data. In April alone Colorado dispensaries sold about $22 million in marijuana, according to the Associated Press. Gov. John Hickenlooper said in February that he expected combined sales from medical and recreational marijuana to reach nearly $1 billion, and forecasts the state would collect about $114 million in taxes and fees next fiscal year.

Pot is a potential job creator, too, as the need grows for farmers, processors, cooks, concentrate makers, distributors, and more. Some places even have budtenders, who guide buyers toward the right variety.

Entrepreneur Magazine profiled Tripp Keber’s four-year-old startup Dixie Elixers & Edibles, which manufactures more than 100 cannabis-infused products for Colorado’s retail marijuana market, such as sodas, mints, chocolate bars, capsules and oil cartridges for vaporizers. Also benefitting are hydroponics and greenhouse manufacturers like Terra Tech. But there are numerous ancillary businesses as well all along the supply chain:

·      Apeks Supercritical manufactures machines that extract the oil from leaves.

·      MJ Freeway and BioTrackTHC are software and data companies that track every gram transferred from growers to processors and retailers to track sales and regulatory compliance.

·      Rodawg designs accessories like joint containers and premium packaging.

·      Medbox builds automated cannabis vending systems.

·      Leafly is the Yelp of pot with reviews of 700 strains and thousands of dispensaries (you can filter by who delivers, and who takes credit cards).

With all this excitement comes serious concerns—specifically that dispensaries aren’t really set up to cater to new-to-pot consumers, and that the product quality isn’t regulated. Witness last week’s personal diary of Maureen Dowd’s 8 hour paralysis after a couple bites of an edible pot chocolate bar in Denver. Among the problems: No standardized dosage, kids mistaking edibles for candy, and no breathalyzer for stoned driving. Colorado’s Gov. Hickenlooper meanwhile created a task force that’s wrestling with these and other issues.

In other words, the pot economy has a lot of opportunities, but it’s still an immature industry held back by black-market production methods, a patchwork of laws, and inconsistent products.  

That can make a pot investor feel like a pot smoker.

“It’s a little bit like Alice in Wonderland,” investor Peter Adams told The New York Times. “All the rules of physics are broken, and you’re trying to figure your way through a strange place.”
Keep Learning,

Brad

Creator, ZEITGUIDE
Founder, Grossman & Partners

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